Bitmain, cryptocurrency mining giant, could be latest U.S. IPO

Bitcoin mining company Bitmain filed confidentially for an initial public offering (IPO) with the U.S. Securities and Exchange Commission late last month.

This decision comes at the behest of a failed IPO attempt on the Hong Kong exchange. Bitmain’s failed application lapsed in March 2019, and was not refiled. Their proposed U.S. IPO is sponsored by Credit Suisse and seeks to raise between $300-$500 million.

As long as cryptocurrency mining is a viable business there will be a demand for the machines to do the deed, and that’s Bitmain’s value proposition. And that proposition has proven to be considerably valuable for the company, which has pulled in billions of dollars over the past three years for their cryptocurrency mining hardware.

Cryptocurrency miners come and go. The flaw is in their business model, and subject to so many external variables beyond their control that their success and failure isn’t really in their hands.

Here’s more or less how it works using Bitcoin as an example.

The difficulty to close the block on Bitcoin’s blockchain is relative to the amount of miners presently mining it. If there are only a handful of miners involved in mining bitcoin, the difficulty to close the block and get rewarded in bitcoin is lower than if there were a lot of competing miners. But as more and more miners recognize the opportunity, the difficulty rate will go up causing a profitability decrease that pushes the wary out of the market, until of course, it goes back down again and then rinse and repeat.

But the common theme with all of these entrants and exits into proof-of-work (PoW) mining has been Bitmain. Inspect the data sheets of any big name cryptocurrency miner and more often than not, you’ll see antminers doing the work. These are wall-to-wall machines strapped to rigging and cooled by industrial sized fans, each devoted to the singular purpose of hashing through the mathematical conundrum to profitability.


Previously, the company opened a new 25 megawatt mining plant in Rockdale, Texas. Originally converted aluminum smelter plant, the Texas plant has the potential to scale to 300 megawatts.

The process of reviews by the SEC will be comprised of three rounds of investigations that could last up to two months. The SEC will question the firm before providing an F1, which is a certification necessary for foreign companies intending to list in the US.

Hurdles to jump

The reality is that cryptocurrency companies will likely have a hard time gaining legitimacy through an IPO in most of the major economic zones, like the United States and China. The latter company has actively banned crypto companies from filing IPOs, and the US having shown more than a little trepidation towards the fledgling asset class.

In the past, the United States has rejected prospective Bitcoin ETFs because of the asset’s volatility and supposed susceptibility to manipulation.

Bitmain has also suffered through some internal drama in the past few weeks resulting in a management shift that saw one of the founders, Micree Kutuan Zhan, leaving the company. Reports suggest that Zhan may have left the company due to internal company issues. Zhan was the major shareholder, with a %36 interest in Bitmain Holdings. In comparison, Jihan Wu, the current chairman and co-founder, owns 20% of the company.

—Joseph Morton

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